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XtraBlatt issue 01-2016

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MENSCHEN INTERVIEW The

MENSCHEN INTERVIEW The Krone Holding advisory board members (l. to r.) Bernard ten Doeschate, Dr. Wilhelm-Friedrich Holtgrave, Philip Freiherr von dem Bussche (chairman) and Bernd Meerpohl. Honorary chairman (not pictured) is Dr. E.h. Bernard Krone. XtraBlatt: Is the advisory board quasi a navigation team for the future of the company? von dem Bussche: That is a very good description – at least in as much as the captain does not have to steer his ship alone through unknown waters. The advisory board naturally doesn’t know every reef. But, thanks to collective experience, can contribute a lot towards finding the right course. XtraBlatt: In this respect, could you give an example of a theme? von dem Bussche: Here we can take the example of the question where a company such as Krone will be in ten years. What will be the effects of the strengths of a specialist, the innovative power, customer-nearness, in relation to external challenges, challenges that naturally do not bypass the enterprise? Let me name just three key words. First: digitalization, in other words the fight for data and against potential access barriers. Can electronic solutions from tractor and implement manufacturers be compatible in the future? Or do we steer towards a monopoly situation? The second keyword goes in the same direction: What will coming developments in the dealership infrastructure look like? Will medium sized concerns such as Krone retain access to professional specialist dealers, or will the full-liners marginalize the specialists? Thirdly, what are the consequences of the kind of very rapid growth experienced by Krone in the last 15 years for the inner structure of the organization? For such themes, we on the advisory board are not always all insiders. However, the themes are prepared and processed by the firm’s management, which, once again, represents an opportunity for those people to both fundamentally and strategically involve themselves in the subjects. The prepared presentation would then be intensively discussed by all of us together. Even when we, now and again, have to ask a silly question, therein lies the opportunity of giving a wise answer and of developing solutions. 1 XtraBlatt: What are the tasks arising from this? von dem Bussche: Let us stay with the example of organization structure. An outstanding strength with Krone is the culture of the family enterprise with a strong “us” feeling within the entire staff – which, after all, means some 6,000 people. However, the distributing of responsibilities, a strategic personnel management, integrated process organization and IT system, the internal communication, and a lot more, cannot be controlled in the same way as in a company with just 500 or 1000 staff. Such maneuvering has, on the whole, worked well with Krone in the passage of the years. However, for the era 4.0 the company faces completely new challenges that cannot be decided alone through the gut feeling of the old-school manager. Here’s where the advisory board comes into play. Its tightly meshed relationship network can offer support in finding ways towards a correct solution, identifying the right experts and recruiting them into the company. The art of successful organization development lies in rebalancing as much structure as needed and as much flexibility as possible, and this with a flatter hierarchy. Or formulating it more simply, to react as professionally as a global player without losing the spirit of the family enterprise and the extremely important nearness to the customer. XtraBlatt: Do you see Krone as well enough balanced for this? von dem Bussche: Yes, definitely so. When you look at the history of the company, there have repeatedly been fundamental and in-part hard changes of direction to be made. An example is the turning away from building of agricultural trailers, or soil cultivation implements, and the focus- 20

2 3 ing on forage harvesting. Or starting in the truck trailer business. The decisive point is that decisions are made in time. It is not enough to look through the current portfolio, but instead to recognize at the right time where one as specialist can retain a leading position with the right innovations. This is because the farmer and the agricultural contractor do not allow themselves to be pressured into single-color sales and machinery concepts from long-liners. What they want is the correct solution for their farm or business because it is the most economically viable. And they also want freedom of choice as to which machines, and what implements, they can combine. The want to remain masters of their own data. But they also want highly professional support from dealers and manufacturers. This freedom of choice for entrepreneurs must be encouraged by medium-sized companies such as Krone. The genetic code with Krone is very near their customers’ DNA. Similar tendencies as seen agricultural machinery I know from my earlier experience in plant breeding. If varieties and genetics, seed treatment and complete data transparency of customers lie in the hands of just a few large concerns, there remains for farmers no freedom of choice in the end. This is why specialists are so important amongst the breeders too. But whether agricultural machinery or plant breeding, it doesn’t matter: those who don’t develop their own strategy in time don’t succeed in the end. This is why I see in the subject “access to customers” one of the central future themes. XtraBlatt: Structural change in farming is currently more marked than it has been for 20 years. What does this mean for manufacturers such as Krone if the market for smaller and medium-sized machinery slumps substantially? von dem Bussche: Unmistakable is a strong polarization. On the one hand, we have farmers with a combination of incomes, meantime representing 60 % of businesses in Germany, that therefore do not have a vehement need to expand. On the other, professional farms with agriculture as main income source and strong growth in size, as well as contractors and machinery rings. Nowadays there’s no argument that the middle-ground featuring the traditional farm with agriculture as primary earner becomes narrower; particularly if the trend towards increased inter-farm cooperation increases. Without question, this has an effect on unit sales potential. However, because of the increasingly complex engineering involved, margin per unit has recognizably risen in the past years. Export sales will also have continued growing importance, not only in professional machinery, but also in the smaller to medium-sized machinery market with appropriate size-related sale numbers. This is because, worldwide, there remain many markets still developing from manual work to mechanical operations with simple machinery. However, one must also consider producing locally in emerging countries. Once again a cerebral challenge in which Krone advisory board members will be involved … On the whole, I am completely convinced that west and central Europe will remain very good regions for machinery sales, because here, we have a worldwide favorable agricultural area. On this, specialists such as Krone can, and indeed must, prepare themselves through retaining their respective positions as leaders of innovation and cost control and additionally keeping their close contact to customers. XtraBlatt: Herr von dem Bussche thank you very much for the discussion! 21